The TJX Companies, Inc. Sees Strong Momentum Continue; Reports Above-Plan Third Quarter FY14 Results with 5% Comp Sales Growth and 21% Adjusted EPS Increase; Raises Full-Year Guidance
Net sales for the third quarter of Fiscal 2014 increased 9% to
For the first nine months of Fiscal 2014, net sales were
Sales by Business Segment
The Company’s comparable store sales and net sales by division, in the third quarter, were as follows:
Third Quarter | Third Quarter | |||||||
Comparable Store Sales1 | Net Sales ($ in millions)2,3 | |||||||
FY2014 | FY2013 | FY2014 | FY2013 | |||||
In the U.S.: | ||||||||
Marmaxx4,5 | +4% | +7% | $4,484 | $4,161 | ||||
HomeGoods | +10% | +6% | $740 | $638 | ||||
International: | ||||||||
TJX Canada | +2% | +4% | $786 | $769 | ||||
TJX Europe | +5% | +11% | $972 | $843 | ||||
TJX | +5% | +7% | $6,982 | $6,411 |
1Comparable store sales outside the U.S. calculated on a
constant currency basis, which removes the effect of changes in currency
exchange rates. 2Sales in
Impact of Foreign Currency Exchange Rates
Changes in foreign currency exchange rates affect the translation of sales and earnings of the Company’s international businesses into U.S. dollars for financial reporting purposes. In addition, ordinary-course, inventory-related hedging instruments are marked to market at the end of each quarter. Changes in currency exchange rates affect the magnitude of these translations and adjustments, and can have a material impact when there is significant volatility in currency exchange rates.
The movement in foreign currency exchange rates had a neutral impact on
consolidated net sales growth in the third quarter of Fiscal 2014 versus
the prior year. The overall net impact of foreign currency exchange
rates had a
For the first nine months of Fiscal 2014, the movement of foreign
currency exchange rates had a one percentage point negative impact on
consolidated net sales growth. The overall net impact of foreign
currency exchange rates had a
A table detailing the impact of foreign currency on TJX pretax earnings and margins, as well as those of its international businesses, can be found in the Investor Information section of the Company’s website, www.tjx.com.
Margins
For the third quarter of Fiscal 2014, the Company’s consolidated pretax profit margin was 12.6%, up 0.9 percentage points over the prior year. Foreign currency had a 0.2 percentage point negative impact on year-over-year comparisons.
The gross profit margin for the third quarter of Fiscal 2014 was 29.3%, 0.5 percentage points above last year’s margin. The increase was driven by buying and occupancy leverage on the above-plan sales and merchandise margin improvement.
Selling, general and administrative costs as a percent of sales were 16.6% in the third quarter, a 0.4 percentage point improvement compared to last year’s ratio, primarily due to several items that negatively impacted last year's ratio, which the Company detailed last year.
Inventory
Total inventories as of
Share Repurchases
During the third quarter, the Company repurchased a total of
Fourth Quarter and Full Year Fiscal 2014 Outlook
For the fourth quarter of Fiscal 2014, the Company is maintaining its
guidance for diluted earnings per share to be in the range of
For the fiscal year ending
The Company’s earnings guidance for the fourth quarter and full year Fiscal 2014 assumes that currency exchange rates will remain unchanged from current levels.
Stores by Concept
During the third quarter ended
Store Locations | Gross Square Feet* | |||||||
Third Quarter | Third Quarter | |||||||
(in millions) | ||||||||
Beginning | End | Beginning | End | |||||
In the U.S.: | ||||||||
T.J. Maxx | 1,052 | 1,075 | 30.6 | 31.1 | ||||
Marshalls | 914 | 941 | 28.3 | 28.9 | ||||
HomeGoods | 430 | 448 | 10.8 | 11.2 | ||||
Sierra Trading Post | 4 | 4 | 0.1 | 0.1 | ||||
TJX Canada: | ||||||||
Winners | 226 | 227 | 6.6 | 6.6 | ||||
HomeSense | 89 | 91 | 2.1 | 2.2 | ||||
Marshalls | 22 | 27 | 0.7 | 0.8 | ||||
TJX Europe: | ||||||||
T.K. Maxx | 355 | 371 | 11.2 | 11.6 | ||||
HomeSense | 27 | 28 | 0.6 | 0.6 | ||||
TJX | 3,119 | 3,212 | 90.9 | 93.1 |
*Square feet figures may not foot due to rounding.
Long-Term Store Potential Estimates Increased at Recent Investor Event
At TJX’s Investor Event on
With TJX’s consolidated store count expected to reach approximately 3,215 stores by the end of Fiscal Year 2014, the Company’s raised store growth estimates represent the potential to expand its store base by approximately 60% with its existing chains in its existing countries alone.
About
Fiscal 2014
At
Recent Investor Event Webcast Information
An archived webcast of the Company’s Investor Event from
Non-GAAP Financial Information
The Company has used non-GAAP financial measures in this press release.
Adjusted financial measures refer to financial information adjusted to
exclude from financial measures prepared in accordance with accounting
principles generally accepted in
Important Information at Website
Archived versions of the Company’s conference calls are available at the Investor Information section of www.tjx.com after they are no longer available by telephone as well as reconciliations of non-GAAP financial measures to GAAP financial measures, and other financial information. The Company routinely posts information that may be important to investors in the Investor Information section at www.tjx.com. The Company encourages investors to consult that section of its website regularly.
Forward-looking Statement
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995: Various statements made in this release are forward-looking and
involve a number of risks and uncertainties. All statements that address
activities, events or developments that we intend, expect or believe may
occur in the future are forward-looking statements. The following are
some of the factors that could cause actual results to differ materially
from the forward-looking statements: execution of buying strategy and
inventory management; operational expansion and management of large size
and scale; customer trends and preferences; market, banner, geographic
and category expansion; marketing, advertising and promotional programs;
competition; personnel recruitment and retention and costs of labor;
global economic conditions and consumer spending; data security;
information systems and new technology; seasonal influences; adverse or
unseasonable weather; serious disruptions and catastrophic events;
corporate and banner reputation; merchandise quality and safety;
expanding international operations; merchandise importing; commodity
pricing; fluctuations in currency exchange rates; fluctuations in
quarterly operating results and market expectations; acquisitions,
business investments and divestitures; compliance with laws, regulations
and orders; changes in laws and regulations; outcomes of litigation,
legal matters and proceedings; tax matters; real estate activities; cash
flow and other factors that may be described in our filings with the
The TJX Companies, Inc. and Consolidated Subsidiaries |
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Financial Summary |
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(Unaudited) |
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(In Thousands Except Per Share Amounts) |
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13 Weeks Ended | 39 Weeks Ended | |||||||||||
November 2, |
October 27, |
November 2, |
October 27, |
|||||||||
Net sales | $ | 6,981,876 | $ | 6,410,913 | $ | 19,613,909 | $ | 18,154,558 | ||||
Cost of sales, including buying and occupancy costs | 4,934,465 | 4,566,073 | 13,954,737 | 13,006,874 | ||||||||
Selling, general and administrative expenses | 1,158,668 | 1,090,282 | 3,251,897 | 3,010,922 | ||||||||
Interest expense, net | 9,371 | 6,089 | 23,572 | 24,098 | ||||||||
Income before provision for income taxes | 879,372 | 748,469 | 2,383,703 | 2,112,664 | ||||||||
Provision for income taxes | 256,717 | 286,918 | 828,599 | 810,821 | ||||||||
Net income | $ | 622,655 | $ | 461,551 | $ | 1,555,104 | $ | 1,301,843 | ||||
Diluted earnings per share | $ | 0.86 | $ | 0.62 | $ | 2.14 | $ | 1.73 | ||||
Cash dividends declared per share | $ | 0.145 | $ | 0.115 | $ | 0.435 | $ | 0.345 | ||||
Weighted average common shares – diluted | 724,108 | 745,741 | 728,283 | 751,034 | ||||||||
The TJX Companies, Inc. and Consolidated Subsidiaries |
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Condensed Balance Sheets |
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(Unaudited) |
||||||
(In Millions) |
||||||
November 2, |
October 27, |
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ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 2,010.8 | $ | 1,641.9 | ||
Short-term investments | 251.3 | 201.0 | ||||
Accounts receivable and other current assets | 595.9 | 470.0 | ||||
Current deferred income taxes, net | 102.4 | 84.6 | ||||
Merchandise inventories | 3,663.2 | 3,297.1 | ||||
Total current assets | 6,623.6 | 5,694.6 | ||||
Property and capital leases, net of depreciation | 3,540.5 | 3,055.7 | ||||
Other assets | 191.6 | 241.8 | ||||
Goodwill and tradename, net of amortization | 313.5 | 180.0 | ||||
TOTAL ASSETS | $ | 10,669.2 | $ | 9,172.1 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 2,346.4 | $ | 2,059.2 | ||
Accrued expenses and other current liabilities | 1,697.4 | 1,539.8 | ||||
Total current liabilities | 4,043.8 | 3,599.0 | ||||
Other long-term liabilities | 831.1 | 920.9 | ||||
Non-current deferred income taxes, net | 396.3 | 411.3 | ||||
Long-term debt | 1,274.2 | 774.5 | ||||
Shareholders’ equity | 4,123.8 | 3,466.4 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 10,669.2 | $ | 9,172.1 | ||
The TJX Companies, Inc. and Consolidated Subsidiaries |
||||||||
Condensed Statements of Cash Flows |
||||||||
(Unaudited) |
||||||||
(In Millions) |
||||||||
39 Weeks Ended | ||||||||
November 2, |
October 27, |
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CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 1,555.1 | $ | 1,301.8 | ||||
Depreciation and amortization | 411.9 | 372.4 | ||||||
Deferred income tax provision | 47.1 | 62.1 | ||||||
Share-based compensation | 56.6 | 49.6 | ||||||
(Increase) decrease in accounts receivable and other assets | (46.8 | ) | 14.0 | |||||
(Increase) in merchandise inventories | (654.8 | ) | (337.0 | ) | ||||
Increase in accounts payable | 417.7 | 407.0 | ||||||
(Decrease) increase in accrued expenses and other liabilities | (6.4 | ) | 253.9 | |||||
Other | (147.0 | ) | (43.8 | ) | ||||
Net cash provided by operating activities | 1,633.4 | 2,080.0 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Property additions | (759.3 | ) | (775.6 | ) | ||||
Purchases of short-term investments | (307.1 | ) | (262.5 | ) | ||||
Sales and maturities of short-term investments | 278.9 | 155.5 | ||||||
Other | 2.7 | 34.4 | ||||||
Net cash (used in) investing activities | (784.8 | ) | (848.2 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of long-term debt | 499.6 | - | ||||||
Payments for repurchase of common stock | (998.1 | ) | (1,004.4 | ) | ||||
Proceeds from issuance of common stock | 117.7 | 100.9 | ||||||
Cash dividends paid | (291.0 | ) | (240.3 | ) | ||||
Other | 53.5 | 41.1 | ||||||
Net cash (used in) financing activities | (618.3 | ) | (1,102.7 | ) | ||||
Effect of exchange rate changes on cash | (31.5 | ) | 5.7 | |||||
Net increase in cash and cash equivalents | 198.8 | 134.8 | ||||||
Cash and cash equivalents at beginning of year | 1,812.0 | 1,507.1 | ||||||
Cash and cash equivalents at end of period | $ | 2,010.8 | $ | 1,641.9 | ||||
The TJX Companies, Inc. and Consolidated Subsidiaries |
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Selected Information by Major Business Segment |
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(Unaudited) |
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(In Thousands) |
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13 Weeks Ended | 39 Weeks Ended | |||||||||||
November 2, |
October 27, |
November 2, |
October 27, |
|||||||||
Net sales: | ||||||||||||
In the United States: | ||||||||||||
Marmaxx | $ | 4,484,174 | $ | 4,161,409 | $ | 12,915,269 | $ | 12,026,518 | ||||
HomeGoods | 739,537 | 637,514 | 2,119,190 | 1,830,950 | ||||||||
TJX Canada | 785,883 | 768,967 | 2,110,743 | 2,069,879 | ||||||||
TJX Europe | 972,282 | 843,023 | 2,468,707 | 2,227,211 | ||||||||
Total net sales | $ | 6,981,876 | $ | 6,410,913 | $ | 19,613,909 | $ | 18,154,558 | ||||
Segment profit: | ||||||||||||
In the United States: | ||||||||||||
Marmaxx | $ | 658,369 | $ | 576,505 | $ | 1,940,647 | $ | 1,762,512 | ||||
HomeGoods | 96,937 | 76,790 | 267,170 | 206,754 | ||||||||
TJX Canada | 128,692 | 127,212 | 293,774 | 290,938 | ||||||||
TJX Europe | 101,043 | 76,840 | 157,936 | 113,293 | ||||||||
Total segment profit | 985,041 | 857,347 | 2,659,527 | 2,373,497 | ||||||||
General corporate expenses | 96,298 | 102,789 | 252,252 | 236,735 | ||||||||
Interest expense, net | 9,371 | 6,089 | 23,572 | 24,098 | ||||||||
Income before provision for income taxes | $ | 879,372 | $ | 748,469 | $ | 2,383,703 | $ | 2,112,664 | ||||
Notes to
Consolidated Condensed Statements
-
During the third quarter ended
November 2, 2013 , TJX repurchased 6.8 million shares of its common stock at a cost of$375 million . During the nine months endedNovember 2, 2013 , TJX repurchased 19.7 million shares of its common stock at a cost of$1.0 billion . OnFebruary 5, 2013 the Board of Directors approved an additional$1.5 billion stock repurchase program. TJX records the repurchase of its stock on a cash basis, and the amounts reflected in the financial statements may vary from the above amounts due to the timing of settlement of repurchases. -
On
December 21, 2012 TJX purchasedSierra Trading Post (STP), an off-price internet retailer for approximately$200 million , subject to customary post-closing adjustments. The operating results of STP since the date of acquisition are not material and have been included with the Company’s Marmaxx segment. -
On
May 2, 2013 TJX issued$500 million of 2.50% ten year notes. The Company intends to use the proceeds from the notes offering for working capital and other general corporate purposes.
Source:
The TJX Companies, Inc.
Debra McConnell
Global Communications
(508)
390-2323